Freedom from budgets…

Do you consider budgeting to be restrictive or freeing? A great question. Here are our thoughts and a case study to illustrate them…

The word budget brings up a number of ideas for me, including plans, boundaries, freedom and goals.

I avoid the word ‘budget’. I believe it has negative overtones, implying restrictions and curtailing of freedom. Indeed, I believe that is one of the main reasons so few people do it.

I use the phrase ‘spending plans’ with my clients. Whilst not implying freedom, I believe it does have positive connotations, including the achievement of aspirations and objectives.

Spending plans are important because they provide boundaries, and within those boundaries they allow you the freedom to spend your money as you will to achieve your goals. To this extent, budgets / spending plans are both restrictive and freeing.

Can I offer this case study to illustrate what I mean (name and some personal details changed, of course, to protect my client’s identity)

Liane was (and still is) a professional in the healthcare services with two daughters who love music. She went through a difficult divorce and then approached me for coaching when her life and money got messy.

Liane got an early insight when she realised her top priority was to ensure her daughters were happy and secure for the rest of their childhood.

However, Liane’s finances gave her little room for this. Much of her income went on ‘comfort spending’ – stocking up her larder (an ingrained habit from long Canada winters) and clothes (driven by a belief that clothes would compensate for her hurt and her ‘inadequacies’).

Sheworked with us to improve her self-belief and practical money management. She created her own life and financial plan, and we encouraged her to analyse and monitor her cash, and make spending plans based around her aspirations and goals rather than her ingrained beliefs. It worked.

Liane recalls taking her children to London for a weekend staying in a hotel and going to the family’s favourite group’s gig on Saturday night.Liane later told us it was a wonderful weekend. Her children had loved it and it had all been within her ‘budget’. Importantly, she had no qualms about the cost of the trip or fears that she would run out of money later.

Liane had worked out her goals, planned her life and finances, set spending plans and achieved the freedom to do what she wanted to achieve her objective without fear or anxiety. That’s the power and freedom of spending plans.